Growth at Jardine brings Footsie place within reach

By Andrew Cave, Associate City Editor

12:01AM GMT 25 Feb 2003

Insurance broker Jardine Lloyd Thompson set its sights on a place in the FTSE 100 yesterday after a 28pc increase in profits helped continue a run that has seen it overtake Royal & SunAlliance in market capitalisation.

Jardine, which has risen from 152.5p in early 1998 to a 700p peak last November, added 6.5p to 631.5p after pre-tax profits climbed from £78.3m to £100m.

The company, which claims to be the best-performing stock in the FTSE 350 with total shareholder return on 377pc over the past five years, has seen its market capitalisation increase from £300m to £1.25 billion.

Over the same period Royal & SunAlliance, Britain's second-largest general insurer, has fallen in value from £12 billion to £1.13 billion. Yesterday, Royal lost 6.25p to a 20-year low of 78.25p.

Steve McGill, Jardine chief executive, said: "We are very near the FTSE 100. We would like to be in it in the context of the profile that it gives." Turnover rose by £38m to £388m, driven by a 16pc increase in revenues from continuing operations at Jardine's risk and insurance division to £314m.

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Mr McGill said about £10m of that growth resulted from increased commissions from soaring insurance premiums, which have quadrupled in classes such as directors' and officers' and medical malpractice cover.

However, he said: "Jardine's achievements cannot simply be attributed to increased insurance premiums in the current hard market." He said the current upswing in premiums is "at or near its peak in many areas of business".

Rates should remain around their current levels for the next two years, although some classes of insurance could still sustain further substantial rises, he said. Jardine's employee benefits division, which outsources pensions administration, reported flat revenues at £74.5m.

Mr McGill said a 12pc underlying increase in revenues from its core operations was offset by an "unexpectedly fast fall-off" in business from companies coping with pensions mis-selling reviews.

An 11p final dividend, due on May 2, raises the total by 16pc to 18.5p.